Demurrer (Judge Martha K. Gooding)


Demurrer to 2nd Amended Complaint

The Court sustains JPMorgan Chase Bank, NA?s Demurrer to the second, third, and fourth causes of action in Plaintiff Nicholas A. Keros? Second Amended Complaint (?SAC?) without leave to amend.? Defendant is ordered to serve and file its answer to the remaining cause of action in the SAC no later than July 5, 2016.

Requests for Judicial Notice

The Court grants JPMorgan?s Request for Judicial Notice (?RJN?).? The RJN is the same as Defendant?s RJN in support of its Demurrer to the initial Complaint, which the Court previously granted.

Merits

  1. violation of Civil Code section 2923.6(c)

Plaintiff alleges ?dual-tracking? in violation of Civil ?2923.6(c).? Plaintiff alleges that on 5/29/15, he hired counsel and submitted an Application for Modification of his loan. (SAC ? 21.) In ?early 2016? Plaintiff alleges that he submitted an updated application for modification. (SAC ? 24.)? Plaintiff alleges that Defendant has continued with the foreclosure process, while reviewing his Application(s), which is ?dual tracking?. (SAC ?? 23, 28.)

In response, JP Morgan argues that because Plaintiff already received a first loan modification in 2013, under Section 2923.6(c)(3), it is not further obligated to review Plaintiff for a loan modification.

The court rejects this argument again, as it did on Demurrer to the Complaint.? The Court does not believe that the word ?first? refers to the modification application, as opposed to the lien priority.? Defendant?s citation of an unpublished federal case, Deschaine v. IndyMac Mortgage Servs., 617 F. App’x 690, 693 (9th Cir. 2015), does not persuade this Court otherwise.? The Court overrules the Demurrer to this cause of action.

 

  1. violation of Civil Code section 2924.10

Plaintiff?s allegations are the same as those in his Complaint, which the court found insufficient to state a claim. ?Further, the Opposition does not address Defendant?s arguments, thereby effectively acknowledging they have merit.

In this cause of action, Plaintiff asks only for damages. (SAC, ? 33 and the Prayer for Relief on the second cause of action).

Plaintiff does not allege that a deed of sale has been recorded.? If a trustee’s deed upon sale has not been recorded, a borrower may bring an action for injunctive relief to enjoin a material violation Sections 2923.55, 2923.6, 2923.7, 2924.9, 2924.10, 2924.11, or 2924.17.

Plaintiff?s damage request is improper.? Because he does not seek any proper relief for the alleged violation of section 2924.10, the court sustains the Demurrer to this cause of action.

Despite being given explicit direction from the court in the ruling on the Demurrer to the Complaint, Plaintiff has failed to correct this defect.?Therefore, leave to amend is denied.

?

  1. Negligence

Plaintiff?s SAC, like his Complaint, alleges that Chase agreed to review his loan application and therefore had a duty to do so with reasonable care.? He bases this agreement on the fact that the Chase representative told him that ?Chase will take a serious look at your application?.? The SAC alleges that once Chase agreed to consider his loan modification application then a duty arose to review it with care.(SAC ? 36.)

The court again finds that Plaintiff has not pled a duty of care.? Considering an application for the renegotiation of loan terms falls within the scope of a lender’s “conventional role as a lender of money.” See Nymark, supra, 231 Cal.App.3d at 1096; Lueras v. BAC Home Loans Servicing LP (2013) 221 Cal.App.4th 49, 67-68 (a lender does not owe a borrower a common law duty to offer, consider or approve a loan modification, or to offer the borrower alternatives to foreclosure, or to handle the loan in such a way to prevent foreclosure and forfeiture of property in the absence of a material misrepresentation); see also Carbajal v. Wells Fargo Bank, N.A., 2015 WL 2454054, at *6 (C.D. Cal. Apr. 10, 2015.)

Further, JPMorgan owes no duty of care in considering Plaintiff’s loan modification application because the harm to Plaintiff is not closely connected to JPMorgan. See Lueras, supra, 221 Cal.App.4th at 67 (“If the modification was necessary due to the borrower’s inability to repay the loan, the borrower’s harm, suffered from denial of a loan modification, would not be closely connected to the lender’s conduct. If the lender did not place the borrower in a position creating a need for a loan modification, then no moral blame would be attached to the lender’s conduct.”) Plaintiff again alleges that his “financial hardships . . . caused him to become delinquent on monthly payments on the loan.” (SAC, ? 12 14.0.

 

The Court sustains the demurrer to the third cause of action on the ground that Plaintiff has not alleged that JPMorgan owed him a duty to consider him for a loan modification. Plaintiff has been unable to allege facts that create a duty and has not shown how this can be remedied.? Therefore, leave to amend is denied.

  1. Breach of the Covenant of Good Faith and Fair Dealing

The purpose of the implied covenant of good faith and fair dealing is limited to assuring the parties’ compliance with the contract at issue; the scope of conduct prohibited by the implied covenant is confined by the “purposes and express terms” of the agreement. Jenkins v. JP Morgan Chase Bank, N.A. (2013) 216 Cal. App. 4th 497, 527-28 (action alleging breach of implied covenant cannot be used to extend existing, or create new, obligations; plaintiff raising claim must allege reasonable relationship between defendant’s allegedly wrongful conduct and express terms or underlying purposes of contract).

 

The Court again finds that an inadequate oral agreement has been pled.? Plaintiff has not added any new facts that would change the Court?s prior analysis.? Therefore, the Court sustains the Demurrer to this cause of action. Plaintiff has not indicated that any other facts exist that could state a claim.? Therefore, leave to amend is denied.

 

Defendant is ordered to give notice of this ruling.